Manhattan Awash in Sublease Space

NEW YORK CITY-Manhattan’s office availability rate has topped 10%, driven by a flood of sublease space that outpaced the quarterly increase in directly available space, says a report from FirstService Williams. The newly issued monthly snapshot for November from CB Richard Ellis says the island’s availability rate was 11% and its vacancy rate was 6.9%, both up more than two percentage points from a year earlier.

The FirstService Williams report puts Manhattan’s overall availability rate at 10.9%, with more than 25% of the total represented by sublease space, the highest rate in more than three years. That includes 2.4 million square feet of sublease space entering the market in the past three months, compared to 1.8 million square feet of directly available space.

“It is highly unusual for the increase in the amount of sublease space to exceed the increase in direct space,” Joyce Geiger, chief economist at FirstService Williams, tells GlobeSt.com. “Also, the sublease availability rate is normally about 1.5% to 2%. It has risen already to 2.8%, with more to come.” She says sublease space may eventually comprise 40% of the total amount of available space, as it did during the dot-com bust.